Construction defies Brexit pessimism but costs a growing threat

The construction industry is defying all the Brexit pessimism still rife in the industry and the country as it grew for a fourteenth consecutive quarter in Q3 of 2017, according to the Construction Products Assocition. However, on the negative side costs were highlighted as a potential threat.

Firms across all areas of construction reported an increase in activity, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers. Indicators of future growth weakened, however, and activity may be severely hindered by inflationary pressures caused by rising wages and imported raw materials costs.
Rebecca Larkin, Senior Economist at the CPA, said, “Following the EU referendum, the entire construction supply chain reported favourable conditions and growth in activity in Q3. Forward-looking expectations for Q4 and the year ahead were more pessimistic, with the majority of orders and enquiries balances the lowest in two years, or driven by a single sector:  private housing.
“A further factor that stood out as a downside risk to activity in the near-term is the sharp rise in the cost of imported raw materials due to the recent depreciation in the Sterling, which is providing a dual hit to construction costs alongside existing wage inflation pressures.”
Key survey findings include:

• 33% of main building contractors, on balance, reported that construction output rose in the third quarter of 2016 compared with a year ago
• A balance of 7% of specialist contractors reported a rise in output during Q3
• 1% of civil engineers, on balance, reported an increase in workloads during Q3
• On balance, 18% of SME contractors reported increased workloads in Q3 compared to three months earlier
• Main contractors reported an increase in orders in private housing but reported a decrease in all other sectors
• 6% of SMEs and no specialist contractors reported an increase in enquiries in Q3, on balance
• 3% of civil engineering firms reported an increase in new orders in Q3, on balance
• 54% of main contractors reported difficulties recruiting bricklayers, 47% for carpenters and 43% for plasterers in Q3
• Overall costs increased for 59% of civil engineers contractors, whilst 66% of main contractors reported raw materials costs rose in Q3 compared with the previous quarter

Take a look at the latest construction sales jobs >>

NEW JOB IN FOCUS: National Sales Development Job for Heavyside Building Products - £85k OTE

Our latest Job in Focus for November is a fantastic national and senior role as Head of Business Development for an innovative manufacturer of heavyside Building Products. The job is to lead a large sales team selling to architects, contractors and merchants.

Our Construction & Building Industry Job in Focus feature takes a detailed look at some of the fantastic sales & marketing construction and building materials job vacancies currently on our books. 

Job in Focus is also promoted on our website. www.pinnacleconsulting.co.uk

Job Title: Head of Business Development

Job Ref: J8286

Product: Building Products

Location: National

Salary: £70k

Sector: Management

Manufacturer of heavyside building products selling to architects, contractors, merchants and distribution 

Basic salary to £70k plus £15k bonus, company car, mobile, laptop, pension and additional company benefits 

COMPANY: A major manufacturer of a range of heavyside building products renowned for their innovative products and solutions for the construction sector. A fantastic opportunity to join a market leading organisation. 

JOB ROLE: A senior level position to take charge of a large sales team to further develop business in the UK market. Responsibilities include managing and developing three separate field sales teams via regional managers selling a range of heavyside building products. The sales teams target architects to generate specification, contractors and merchants/distributors. A strategic approach is required with long term development in mind, the role will also incorporate an element of managing new product launches and marketing campaigns but is a business development position at its core. An ideal position for a senior manager looking to directly influence the success and direction of a large organisation in the UK market. 

LOCATION: National however the position requires frequent travel to head office in London 

CANDIDATE: A strong sales manager with experience working with multiple teams with varied routes to market. A structured and strategic approach is required with experience in developing long term business and product recognition. A background in heavyside products would be ideal however any construction related product background will be considered. Above all a proven track record in sales management and business development is key to the position. 

For further information or to discuss your career options contact Aaron on 01480 405225 or apply online.

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Latest research predicts plumbers’ merchants market to increase by 4%

The plumbers’ merchant market was worth an estimated £4 billion in 2015, having recovered strongly in recent years. Demand has increased since 2013, leading to greater demand for plumbing materials, bathroom and shower products, and the plumbers’ merchants market is forecast to grow by around 4% in 2016, according to a report by AMA Research.

Increasing demand has been attributed to the improving economic climate in general since 2013, with demand increasing for both new work and RMI activity.

Price competition remains fierce and AMA Research believes this may influence margins going forward. In order to differentiate themselves, some plumbers’ merchants have invested in improving the overall customer experience through enhanced service, such as extended opening times, greater availability of stock and heightened promotional activity. Many have also expanded their online presence, to ensure that they compete with rising internet sales.

Consolidation has been a feature of the marketplace in recent years, as nationals have acquired smaller regional operations in order to extend their reach and range of services. However, many regional and independent merchants have performed well, with some expanding their number of branches to improve their product offering and stock levels to meet local needs.

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It is extremely difficult to forecast the impact of the outcome of the EU Referendum on the economy going forward. Several economic forecasts suggest that the UK economy will start to slow, with business and consumer confidence affected, potentially with lower GDP growth in 2017 and 2018. The situation may improve after this, depending on the outcome of trade negotiations, both within and outside the EU, which have yet to take place.

Both Travis Perkins and Wolseley, two of the leading merchant groups in the country, have streamlined the plumbers’ merchant sides of the respective businesses as a result of uncertainty in the market.

“While there are indications of a slowdown in growth in the housing and commercial sectors from mid to late-2016, the plumbers’ merchants market is still forecast to increase by around 4% compared with 2015, with a further 2 to 3% per annum expected from 2017 onwards” said Keith Taylor, director of AMA Research.

UK jobs market strengthens in first quarter after Brexit vote

The latest data from the UK’s largest job site, reed.co.uk, shows that the number of jobs advertised in the first quarter since the EU referendum rose 9% on the same period last year. That’s over 48,000 extra jobs added to reed.co.uk in the third quarter of 2016 compared to last year. 

Sectors
According to the latest reed.co.uk Job Index, Motoring & Automotive (+27%) and Manufacturing (+24%) were amongst the strongest performing sectors for year-on-year growth in Q3. However, jobs in Banking (-18%) and in Charity & Voluntary (-15%) saw the biggest annual contractions following the announcement of the referendum result.

Regions
Across the country the picture is positive, with all regions seeing annual jobs growth between July and September. Northern Ireland (+50.6%), Wales (+21.5%) and the East Midlands (+16.2%) were the regions reporting the biggest growth in vacancies.

However, London and the South East have both seen a drop in the number of vacancies on offer in Q3 when compared to the previous quarter, with a fall of -2.8% and -4.3% respectively.

Download the full report here>>


Picture credit: Shutterstock ref_236392702 

Find out the future trends to influence the UK Domestic Central Heating Market

A new report from AMA research takes a detailed look at the future of this market over the next 4 years and is available now to order. Despite being a mature market, it is still expected to have an increase in value of 14% by 2020.

The UK domestic heating market has benefited from a number of Government initiatives in recent years, along with growth in the new housing sector. Other key trends include the wider use of smart heating controls and an increased focus on energy efficiency. The report reviews developments within the industry, with emphasis on both qualitative and quantitative market assessment - both essential requirements to good marketing planning. Recent trends, key influencing factors and future developments are assessed.

The UK domestic central heating market is substantial, with an estimated total value of around £1.1bn at manufacturers’ prices in 2015. While the market is mature with central heating installed in around 92% of UK homes, growth potential still exists, particularly through smart heating innovation, used to improve energy efficiency and control.

The UK market for central heating saw a notable increase in 2013, with demand in 2014 also reasonably positive, though performance has been much more subdued in 2015/16, reflecting the withdrawal of the ECO scheme and the Green Deal affecting boiler sales in particular. However, the market has benefitted from the introduction of smart heating controls in the past 2-3 years, and demand from the new housebuilding sector has continued to increase.

The UK domestic central heating market has benefited in recent years from increasing health, safety and energy efficiency legislation, revised Building Regulations and environmental legislation. This has stimulated product innovation and development in all sectors of the market. The widespread introduction of smart heating controls has also supported demand, with all of the Big 6 energy companies having added a smart thermostat to their home energy management portfolio. UK householders are becoming much more environmentally aware and are looking towards smart heating solutions in order to minimise energy usage and to save money. Factors which have limited opportunities for growth include the continuing trend towards greater levels of property insulation, driven by further 2014 revisions to Part L of the Building Regulations, which have tended to reduce the overall heating load. 

The future performance of the UK domestic heating market is likely to be influenced by overall trends in housebuilding, home improvement, fuel prices, energy efficiency legislation, renewable technologies, and technological developments. With the evolving trend towards smart IoT devices in the home, the development of smart heating controls will have a significant impact on the overall domestic central heating market. There also continues to be significant opportunities to upgrade existing boilers to the more fuel-efficient condensing models. Around 40% of all boilers installed in the UK are non-condensing models. However, there will still be many homeowners who will continue to demand more conventional solutions. Real benefits such as ease of use and convenience will continue to be the primary focus of many conventional heating controls suppliers.

The outlook for the UK domestic central heating market in late 2016 remains relatively flat, with an uncertain UK economy following the UK ‘Brexit’ vote. However, more steady growth is anticipated from 2018 onwards, driven by the replacement sector and the increasing concern regarding energy efficiency and energy costs etc. By 2020, it is estimated that the UK domestic central heating market will have increased by 14% in value terms, compared to 2016. 

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Job in Focus: Specification Sales Job in London for Commercial Roofing Products - £80k OTE

Our latest Job in Focus for is an excellent Specification Sales job in the London area for an innovative manufacturer of Commercial Roofing Products to architects, surveyors, contractors and local authorities. It comes with an £80k OTE.

Our Construction & Building Industry Job in Focus feature takes a detailed look at some of the fantastic sales & marketing construction and building materials job vacancies currently on our books. 

Job in Focus is also promoted on our website. www.pinnacleconsulting.co.uk

Job Title: Specification Sales Executive
Job Ref: J8280

Product: Commercial Roofing

Location: London 

Salary: £50k (80k OTE)

Manufacturer of commercial roofing products. Selling to architects, surveyors, contractors, local authorities. 

Package: £50K basic with £80K OTE. Car or allowance, mobile, laptop, healthcare, pension. 

Employer: A well established an innovative manufacturer of commercial roofing products, well known for career development opportunities. 

Job Description: An excellent opportunity to pick up an established patch with fantastic growth potential. Marketing the full range of products with architects, surveyors, local authorities as well as following the process through with contractors. This is a project led specification role where you will be responsible for influencing at all points. 

Area: Field based role covering London - candidates must live wihin the M25. 

Person: We are seeking a high calibre field sales professional with experience of selling a commercial roofing product via specification with architects or surveyors. The client would also consider a contractor facing candidate who understands the products. 

For further information or to discuss your career options contact Adam Paine on 01480 405225 or apply online.

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CPA Forecasts mixed picture for Construction in 2017-2018 due to impact of uncertainty

The CPA’s latest forecasts highlight a mixed picture for the construction industry over the next two years due to the impacts of the uncertainty following the EU referendum. Overall, construction activity is expected to remain broadly flat in 2017 and 2018, but this masks a more nuanced picture at the sector level with growth in infrastructure and education offsetting falls in activity in sectors such as commercial offices and industrial factories.

Noble Francis, Economics Director, said: “Surveys across the industry highlight that activity in the construction sector has been sustained post-referendum, primarily based upon work on projects that were signed in the 12-18 months before the referendum. Looking forward, projects in the pipeline mean that construction activity is likely to continue throughout the rest of 2016 and the first half of 2017.


“From the second half of 2017, however, there is likely to be a clear division between the fortunes of privately-funded construction sectors – such as commercial offices and industrial factories – where the current uncertainty is likely to have a major impact, and those that are largely unaffected by post-referendum uncertainty – such as infrastructure and education – which are either publicly-funded or in regulated sectors.


“In construction sectors that are likely to be affected by the uncertainty, new investment has already fallen sharply but the lag between new contract awards and activity on the ground means that the weakening in sector output is likely to occur from the second half of next year. Commercial offices output is expected to decline 3.0% in 2017 and a further 10.0% in 2018. In the industrial factories sector, construction is expected to fall 11.6% between 2015 and 2018 as renewal and refurbishment of existing factories continues but large manufacturers make fewer new major investments.

“Within sectors that are expected to be largely unaffected by uncertainty, infrastructure will be a key driver of construction activity. Major projects such as HS2, Hinkley Point C nuclear power station and the Thames Tideway Tunnel are anticipated to provide growth of 6.2% in 2017 and 10.2% in 2018. Within education construction, activity is expected to rise 5.8% by 2018 due to public sector capital investment in the Priority School Building Programme and private sector investment in universities, including £1 billion programmes at Manchester, Cambridge and Glasgow.

“Outside of these sectors, private house building has not been affected by the uncertainty so far and is expected to rise by 2.0% in 2016. It is anticipated to remain flat in 2017 before a 2.0% fall in 2018 due to slower demand as UK economic growth and real wage growth both weaken considerably next year. However, private house building could be boosted by new measures in the government’s Autumn Statement on 23 November. The slower real wage growth in 2017, driven by higher inflation due to the recent falls in Sterling, is also expected to lead to a decline in retail construction of 4.0% in 2017 and 2.0% in 2018. This in a sector already hit by the shift away from traditional retail towards online shopping.“With an upcoming Autumn Statement, it is vital that the Chancellor focuses on reducing uncertainty for the private sector, sustaining the housing sector and ensuring delivery of education construction and major infrastructure projects already in the pipeline.”

Key results from the latest CPA construction forecasts include:

• Construction output to rise 0.6% in 2016, 0.3% in 2017 & 0.2% in 2018
• Offices construction to increase 8.0% in 2016 before a decline of 3.0% in 2017 and 10.0% in 2018
• Factories construction to fall 5.0% in 2016 and 2.0% in 2017
• Infrastructure work to rise by 6.2% in 2017 and 10.2% in 2018
• Private housing starts to rise 2.0% but remain flat in 2017 and fall 2.0% in 2018
• Retail construction to fall 8.0% in 2016 before falls of 4.0% in 2017 and 2.0% in 2018

Picture from Shutterstock: ref. shutterstock_317909906

Housing activity drives construction output rise in October

UK construction companies recorded a sustained expansion of overall business activity in October, led by another solid increase in residential work. New order volumes also picked up across the construction sector, but the rate of growth eased since September and remained weaker than seen prior to this summer.

This contributed to a drop in business confidence regarding the year-ahead growth outlook, with the latest reading the second lowest since May 2013. At the same time, input costs rose at one of the fastest rates seen over the past five years, which survey respondents widely linked to the weaker pound.

Highlights

• Business activity increases at fastest pace since March
• Residential work remains key growth engine
• Input price inflation close to its highest since mid-2011

At 52.6 in October, the seasonally adjusted Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) edged up from 52.3 in September and remained above the 50.0 no change threshold for the second month running.The latest reading pointed to the fastest upturn in activity since March, although the rate of growth was only modest and still much softer than the average since the recovery began three-and-a-half years ago (57.3).

Housing activity remained the key growth driver across the construction sector in October. Latest data signalled a solid increase in residential building work, and the pace of expansion was only slightly weaker than September’s eight-month peak. There was also a stabilisation in commercial construction activity during October, while civil engineering decreased slightly and was the weakest performing broad category of activity.

New business growth was only moderate in October and still much weaker than seen during the first quarter of 2016. Some firms noted that Brexit-related uncertainty had continued to act as a brake on client confidence and resulted in delayed spending decisions.

Nonetheless,construction companies reported a further upturn in their staffing levels and purchasing activity during the latest survey period. The rise in input buying was the fastest since March, which contributed to a sharper deterioration in supplier performance in October. Input prices increased at the second-fastest rate since July 2011 (exceeded only by the rise in costs reported this August). Anecdotal evidence suggested that suppliers had sought to pass on higher imported raw material prices following the sharp depreciation of sterling against the US dollar and euro. Some construction companies also pointed to greater transportation costs in October. 

Looking ahead, the number of construction firms expecting a rise in business activity over the next 12 months (43%) continued to exceed those that forecast a reduction (14%). However, the latest reading was down markedly sinceSeptember and the second-lowest since May2013. A number of survey respondents cited the impact of Brexit uncertainty on investor sentiment, alongside reduced confidence towards the general economic outlook. 

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “Housing proved to be the most resilient driving force behind the continued moderate expansion of activity – the fastest since March, but, the level of new order growth was at a weaker level than seen earlier in the year.

“Supplier performance deteriorated slightly reflecting the ongoing trend of low stocks seen in the last few months, as the level of input buying increased at its fastest rate since March.

“A rise in input prices due to the weak pound resulted in the second-fastest increase in cost pressures since mid-2011.

“Respondents reported a squeeze on margins,while increased marketing and new projects helped counteract the continuing uncertainty surrounding the Brexit aftermath. Coupled with concerns around the longer-term performance of the UK economy, this dampened overall business optimism to its second-lowest level since May 2013.”

Construction sector showing no obvious negative Brexit effect

Now that the first three months of post-Brexit figures are available it has become clear the Brexit has not had any prolonged effect. The latest figures show that construction sector contracts across September reached a total of £5.6 billion, which is a minor increase on August, and all signs indicate that the industry seems to have stabilised.

According to the October edition of the Economic & Construction Market Review from industry analysts Barbour ABI, the residential sector played a prominent role in stabilising construction figures across September. With the government pushing for more housing to be built and ambitious targets set, over £1.7 billion of residential contracts were agreed to on the month, a year on year increase of 12%.

Another sector that performed well this past month was the hotel, leisure & sport industry, with construction contracts value worth over £500 million, a massive 99% higher than a year ago. This was helped greatly by the commissioning of the Aberdeen exhibition and conference development worth £330 million. The sector’s improved performance will be received favourably after a fairly stagnant year.

The most disappointing sector over the month was infrastructure, which was down by a substantial 44.5% compared to September 2015. Additionally if it wasn’t for the £657 million M4 smart motorway scheme in Berkshire, then this figure would be much lower.

Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said: “Overall, the construction sector has so far been robust enough to stave off the potential effects from the shock Brexit vote and has kept contract values at a healthy level, helped significantly by residential projects and the often wavering infrastructure sector.”

“A welcome boost for the industry would be an increase in contract values from other sectors outside of residential & infrastructure, such as commercial & retail, which had its poorest month in September since May 2015.”

NEW Job in Focus. National Accounts Manager for HVAC - £65k + 30% bonus

Our new Job in Focus for November is an excellent National Accounts job for HVAC products, including insulation, fire protection and acoustic products. Your customer base is to sell to contractors and developers. You would manage two Area Managers and would be responsible for sales development on a national basis.

Our Construction & Building Industry Job in Focus feature takes a detailed look at some of the fantastic sales & marketing construction and building materials job vacancies currently on our books. 

Job in Focus is also promoted on our website. www.pinnacleconsulting.co.uk

Job Title: National Accounts Manager - HVAC

Job Ref: J8203

Product: Insulation

Salary: £65k

GLOBAL INSULATION BRAND SELLING TO CONTRACTORS AND DISTRIBUTORS 

SALARY: Up to £65,000 plus 30% bonus and excellent package including company car, pension, healthcare and 30 days holiday. 

EMPLOYER: Our client is a true market leading manufacturer of structural building products. 

JOB DESCRIPTION: National Account Manager HVAC: This person will be responsible for a team of two area sales managers targeted with selling insulation, fire protection and acoustics to contractors and distributors within the HVAC market. Key responsibilities include delivering double digit growth per year, ensuring the best customer service experience in the industry and maintaining the high performance of the sales team. 

LOCATION: Field based covering nationally so could live in Worcestershire, Herefordshire, Warwickshire, Gloucestershire, Somerset, Devon, Cornwall, Devon, Dorset, Hampshire, Oxfordshire, Wiltshire, Berkshire, Buckinghamshire, Surrey, Sussex, Kent, London, Middlesex, Essex, Suffolk, Norfolk, Cambridgeshire, Bedfordshire, West Midlands, Staffordshire, Shropshire, Somerset, North Somerset, Gloucestershire, Wiltshire, Dorset, Hampshire, Wales, Suffolk, Cambridgeshire, Norfolk, Cambridgeshire, Northamptonshire, Nottinghamshire, Leicestershire, Lincolnshire, Derbyshire, North Yorkshire, South Yorkshire, West Yorkshire, East Yorkshire, County Durham, Cleveland, Cumbria, Lancashire, Merseyside, Cheshire or Greater Manchester 

PERSON: Our client is seeking a high calibre professional and driven individual with exceptional sales ability. The successful candidate will need to come from the HVAC market and be a proven man manager. Additionally, you will have a strong grasp of strategic and operational thinking and have well-developed conceptual and analytical skills. 

For further information or to discuss your career options contact Natalie Matthews on 01480 405 225 or apply online.

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